AKGVG Budget Analysis 2024

Preface

Finance Minister Smt. Nirmala Sitharaman carved her name in history by unveiling her seventh consecutive Union Budget for 2024-25, breaking former Prime Minister Morarji Desai's record of six consecutive budgets from 1959-64. This budget is the first comprehensive financial blueprint of the Narendra Modi-led NDA government in its third term and a testament to a visionary approach towards India's economic future. With a focus on innovation, resilience, and inclusive growth, Sitharaman's groundbreaking address sets the stage for a transformative era, promising prosperity and progress for the nation.

FINMIN emphasizes key sectors including employment, skilling, MSMEs, and the middle class. Building on the interim budget’s focus on aiding the Gareeb (poor), Mahila (women), Yuva (youth), and Annadata (farmers), this year’s budget introduces nine priorities aimed at:

Fostering productivity and resilience in agriculture,
Employment and skilling,
Inclusive human resource development and social justice,
Manufacturing and services,
Urban development,
Energy security,
Infrastructure,
Innovation, research and development,
Next-generation reforms.

A day before,FINMIN presented the Economic Survey 2024 and estimated Rs 21.99 lakh crore from direct taxes and Rs 16.22 lakh crore from indirect taxes.

The 2024 Budget showcases a strategic vision aimed at driving economic growth and social progress. The government's dedication to fiscal responsibility, paired with focused investments, paves the way for a vibrant and sustainable economic path. As India faces upcoming challenges, these budgetary measures are designed to steer the nation toward a brighter future, addressing both immediate needs and long-term goals.

Sectorial Highlights

PRODUCTIVITY AND RESILIENCE IN AGRICULTURE

Take initiatives such as the extension of PM Garib Kalyan Anna Yojana and higher Minimum Support Prices for major crops.
Agricultural research set to increase productivity and develop climate-resilient varieties.
Deliver comprehensive economic growth and social welfare.
Initiative to transition 1 crore farmers to natural farming within two years.
Allocation of ₹2.66 lakh crore for rural development.
109 high-yielding, climate-resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers.
New Strategy for atmanirbhartafor oil seeds such as mustard, groundnut, sesame, soybean, and sunflower.
Promoting Farmer-Producer Organizations, cooperatives and start-ups for vegetable supply chains..
10,000 need-based bio-input resource centresto be established.
Land registries for 6 crore farmers.
Jan Samarth-based Kisan Credit Cards for 5 states.

HUMAN RESOURCE DEVELOPMENT AND SOCIAL DEVELOPMENT

The "Purvodaya: Vikas bhiVirasatbhi" plan targets economic growth in Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh, including an industrial node at Gaya in the Amritsar-Kolkata Industrial Corridor.
Over ₹3 lakh crore allocated for schemes benefiting women and girls.
The Pradhan Mantri Janjatiya Unnat Gram Abhiyan aims to enhance the socio-economic conditions of tribal communities by covering 63,000 villages and benefiting 5 crore tribal individuals.
The Andhra Pradesh Reorganization Act allocates ₹15,000 crore in FY 24-25 for completing the Polavaram Irrigation Project and enhancing infrastructure.
Extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for 5 years, benefiting more than 80 crore individuals.
Revised Model Skill Loan scheme offers up to Rs 7.5 lakh with government guarantees.
1000 ITIs to be upgraded under a Hub and Spoke model.
20 lakh youth to be skilled over five years.
Financial support for loans up to Rs 10 lakh for higher education in domestic institutions for previously ineligible youth.

URBAN DEVELOPMENT

Encourage states to reduce stamp duties for properties bought by women.
Develop 100 weekly street markets or food hubs in select cities.
Implement transit-oriented development plans for 14 large cities with populations over 30 lakh.
Water management - Promote water supply, sewage treatment, and solid waste management projects in 100 large cities.
PM Awas Yojana Urban 2.0 to invest ₹10 lakh crore to address the needs of 1 crore urban poor and middle-class families.
PM Awas Yojana Urban 2.0 to invest ₹10 lakh crore to address the needs of 1 crore urban poor and middle-class families.

EDUCATION

Financial support for domestic higher education loans up to ₹10 lakh.
1 lakh e-vouchers for loans to students every year for annual interest subvention of 3%..

INFRASTRUCTURE

Provision of ₹11,11,111 crore for infrastructure (3.4% of GDP)
₹1.5 lakh crore to states as long-term interest-free loans to support resource allocation.
Phase IV of PMGSY will be launched to provide all-weather connectivity to 25,000 rural habitations.
Development of rental housing for industrial workers in PPP mode.
Special financial support of ₹15,000 crore allocated for Andhra Pradesh.
New airports, medical facilities, and sports infrastructure are planned for Bihar.

BANKING

Over 100 branches of India Post Payment Bank will be established in the North East region.

MSME INCENTIVES

A new financial package was formulated to provide technology support to MSMEs.
Self-financing guarantee fund guarantee up to Rs. 100 crore to each applicant.
Term loans facilitated for machinery purchases.
Credit guarantee scheme introduced for MSMEs in the manufacturing sector.
Mudra loan limit increased to Rs 20 lakh from Rs 10 lakh for those who have previously availed and repaid loans.
SIDBI will open 24 new branches to support MSME clusters.
Turnover threshold for buyers was reduced to Rs 250 crore from Rs 500 crore for the TReDS platform.
50 multi-product food irradiation units for the MSME sector.
E-Commerce Export Hubs for MSME to operate in international markets.

TOURISM

Support for developing corridors at Vishnupad Temple and Mahabodhi Temple, modeled after the Kashi Vishwanath Temple.Development of Nalanda in Bihar as a prominent tourist center.
Development of Nalanda in Bihar as a prominent tourist center.
Introduction of an economic policy framework to drive next-generation reforms and enhance economic growth.
Assistance to Odisha for advancing tourism development.

ENERGY SECURITY

Collaborations with the private sector on nuclear energy.
Pumped storage policy.
Energy audits, and advanced ultra-supercritical (AUSC)thermal power plants.
PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plans for 1 crore households.

EMPLOYMENT AND SKILLING:

Five schemes targeting 4.1 crore youth over five years with a central outlay of ₹2 lakh crore.
Comprehensive internship program for one crore youth in leading companies over five years.
Employment-linked incentives, including one month's wage support for first-time employees.
Women-focused skilling programs to enhance workforce participation.

INNOVATION, RESEARCH & DEVELOPMENT:

Launch of the Anusandhan National Research Fund for basic research and prototype development.
Private sector-led research and innovation at a commercial scale with a financing pool of ₹1 lakh crore.
Establishment of a ₹1,000 crore venture capital fund for the space economy.

NEXT GENERATION REFORMS:

Climate Finance Taxonomy: Boosting capital availability for climate adaptation and mitigation investments.
FDI and Overseas Investments: Simplified regulations to facilitate FDIs and promote the use of the Indian Rupee for overseas investments.
NPS Vatsalya: A contribution plan for parents and guardians to invest in minors.
Enhanced Data Governance: Improving data collection, processing, and management.
New Pension Scheme (NPS): Developing a solution that addresses key issues, protects citizens, and ensures fiscal prudence.

MANUFACTURING & SERVICES

Establishment of twelve industrial parks under the National Industrial Corridor Development Programme.
Launch of the Critical Minerals Mission to enhance domestic production, recycling, and overseas acquisition.
Strengthening and expanding tribunals and appellate tribunals to expedite insolvency resolution.

MISCELLANEOUS:

Fully exempt three additional cancer medicines from customs duties to make them more affordable.
Lower Basic Customs Duty (BCD) to 15% on mobile phones, mobile PCBA, and chargers to benefit the mobile industry.
Reduce customs duty on gold and silver to 6% and on platinum to 6.4% to promote domestic value addition.
Cut BCD on shrimp and fish feed to 5% to enhance competitiveness in marine exports.
Exempt more capital goods used in the manufacturing of solar cells and panels to support the energy transition.
Fully exempt customs duties on 25 critical minerals to boost strategic sectors.

Direct Taxation Highlights

With the continuous aim to reduce the compliance burden, promote entrepreneurial spirit, strengthen grievance redressal mechanism and provide tax relief to citizens, the budget has proposed the following changes:

Short-term Capital Gain tax (111A) increased from 15% to 20%
Long Term Gains tax rate set at @ 12.5% (indexation benefit withdrawn)
Capital Gain exemption limit increased from Rs. 1,00,000 to Rs. 1,25,000.
Period of holding for classification as long-term capital asset set at 2 years
Slab Rates applicable on Unlisted bonds and debentures, debt mutual funds and market-linked debentures, irrespective of the holding period
Capital Gain Receipts from Buy Back to be taxed in the hands of Investors
Standard deduction benefits for salaried personsincreased from Rs. 50,000to Rs. 75,000 under the new tax regime
Family Pension deduction increased from Rs. 15,000 to Rs. 25,000 under the new regime
NPS limit for employers increased from 10% to 14% of the salary
NPS Deduction of 14% of salary proposed under new tax regime
Major relief provided to all taxpayers in new tax regime with changed slab rates as follows:

0-3 lakhs : Nil
3-7 lakhs : 5%
7-10 lakhs : 10%
10-12 lakhs : 15%
12-15 lakhs : 20%
above 15 lakhs: 30%

Non-reporting of movable assets abroad upto Rs. 20 lakhs de-penalized under the Black Money Law
Immunity from penalty and prosecution to benamidar on full and true disclosure to improve conviction under the Benami Transactions (Prohibition) Act
STT on Futures and Options hiked t0 0.02% and 0.1% respectively
Angel taxation abolished for all class of Investors
Major services under income tax digitalized, remaining services of income tax including rectifications to be digitalized over next 2 years.
Time for reopening assessment proceedings reduced from 10 years to 5 years, in case escaped income is Rs 50 crores or more and 6 years in search cases, from the end of assessment year
Deploying more officers for disposal of backlog of appeals, especially with large tax effect
Proposal for Vivad se Vishwas Scheme, 2024.
Increase in monetary limits for departmental appeals as follows:
- Tax Tribunals : Rs. 60 lakhs
- High Court : Rs. 2 crores
- Supreme Court : Rs. 5 crores
Expansion of tax benefits to certain funds and entities in IFSC
Tax Rate for Foreign Companies reduced from 40% to 35%
Withdrawal of Equalization Levy @ 2%
Simpler Tax regime for foreign shipping companies undertaking domestic cruise activities
Expanding Scope of Safe Harbour Rules (including Foreign Mining Companies selling raw diamond) and streamlining Transfer Pricing Assessment Procedure
TDS rate of 5% on certain payments reduced to 2%
20% TDS on re-purchase of units by Mutual Fund/UTI withdrawn
TDS rate on E-commerce operators reduced from 1% to 0.1%
TCS credit can be considered at the time of TDS deduction on Salary
Decriminalizing delay in TDS deposit upto the due date of filing TDS return Standard Operating Procedure (SOP) for TDS defaults and rationalization of TDS defaults compounding guidelines.

Indirect Taxation Highlights

Retrospective Amendment in Section 16 (Sub-section 5) with Effect from 01.07.2017:
- Extends the deadline for claiming Input Tax Credit (ITC) for invoices or debit notes under Section 16(4) of the CGST Act up to 30th November 2021, for financial years 2017-18, 2018-19, 2019-20, and 2020-21. Applies to returns filed in FORM GSTR-3B.
Conditional Relaxation under Section 16 (Sub-section 5) withRetrospective Effect from 01.07.2017:
- Provides conditional relaxation where returns, from the date of registration cancellation to revocation, are filed within 30 days of the revocation order.
Amendments in Section 73 and 74 of the CGST Act, 2017
Insertion of New Section 74A in the CGST Act:
- Introduces a common time limit for issuance of demand notices and orders, irrespective of whether the case involves fraud, suppression, willful misstatement, etc.
Amendment in Section 107 of the CGST Act, 2017 and Section 112:
- Reduces the amount of pre-deposit required for filing appeals under GST.
Amendment in Section 122 of the CGST Act:
- Relates to penalty provisions for E-commerce operators.
Insertion of Section 128A:
- Allows for waiving interest and penalty on demand notices issued under Section 73 for taxpayers who pay the full tax amount by 31st March 2025.

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Disclaimer: The entire contents of this journal have been prepared on the basis of relevant provisions and information existing at the time of preparation. The observations of the author are personal views, and the author does not take any responsibility of the same and this cannot be quoted without the written consent of the author.

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Knowledge Updates Team
AKGVG & Associates
(Chartered Accountants)

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